
National Electricity Market
Solar
Wind
Hydro
Gas
Coal
Nuclear
What do more renewables mean for our electricity system?
The end of coal and rise of renewables is shaping tomorrowâs power grid today. It poses challenges for nuclear power.
Turning on the lights is something we do without thinking, but have you ever thought about what makes it possible?
With the press of a finger, we interact with âAustraliaâs largest machineâ â the National Electricity Market (NEM), which spans 5,000 kilometres north to south along the continentâs eastern seaboard and supplies just the right amount of electricity through almost 800,000 kilometres of power lines.
You might not have thought about it, but understanding how it works will help you understand the implications of the policies Australians are voting for at this election.
Sounds complicated? Donât worry, weâre here to step you through how it works, what it could look like in the future, and what plans by the Coalition for nuclear energy in Australia mean for the transition.
Youâll never look at a power bill the same way again.
To help us make sense of it all, weâve turned to one of Australiaâs leading energy experts â Dylan McConnell from the University of New South Wales.
Dr McConnell says the changes in Australiaâs energy mix over the past two-and-a-half decades have been profound, and weâre further along the transition to the system of tomorrow than people might expect.
âWeâre very much on the path towards a renewables dominated system firmed (backed up) by storage and a little bit of peaking gas.â
Where do energy prices come from?
Letâs look at the economics, starting with demand.
Over a typical 24 hours, demand for energy builds through the day and continues into the late afternoon or evening as people come home from school or work and start using appliances like TVs, lights and air conditioners.
An important distinction needs to be made here. There is the overall demand for electricity in any given day and then there is the demand excluding rooftop solar, which can be a very significant source of supply indeed. But more on that later.

Energy generation follows our activity
12am
Noon
12am
Peak demand
Demand rises as we wake up...
... and falls as we wind down.
Now letâs look at how demand is met.
Meet AEMO, the Australian Energy Market Operator. AEMOâs job is to manage the grid and ensure we have enough energy â not too little, and not too much.

TO DO :
Keep the lights on
Hello, power station?
Please send us more energy.
AEMO
AEMO is like a conductor, orchestrating the sale of power from generators â via the poles-and-wires networks â to retailers, who ultimately sell it to homes and businesses. Often, generators and retailers will be one and the same business.

AEMO manages the flow of energy through the grid
ENERGY DISTRIBUTORS
CONSUMERS
This is the energy âgridâ or âmarketâ. Australia has two main grids: the NEM covering most of the population, and the Wholesale Electricity Market (WEM), which is Western Australiaâs biggest.
The NEM and WEM run like proper markets. Power stations set their prices competitively to sell energy to customers (energy retailers). AEMO runs the market and will make sure thereâs enough energy available to meet demand.
Logically, we aim to buy the cheapest energy first. In this example, say itâs coal.

The cheapest energy is purchased first
5pm
5:30pm
6pm
Demand
The most expensive generator sets the current market price.
And all generators are paid this amount.
Price
$
$$
Conceptually, AEMO will progressively call on more expensive sources of energy once the cheapest supply is exhausted.
Importantly, the market price for energy is set by the most expensive plant needed at a given time and this price is paid to all subsequent generators.

The most expensive generator sets the price
5pm
5:30pm
6pm
Gas often sets the price during times of high demand.
Price
$
$$
$$$$
$$$$
$$$
Like in any market, how generators decide to set their prices is based on a variety of factors. For example, if thereâs a lot of sun available, a solar farm can offer to sell its supply for less.

High daytime supply
Lower prices from competitors
High evening demand
Lower prices
Lower demand
Higher prices
If your plantâs operating costs are high, that limits how low you can afford to drop your prices. Or if all other competing plants are sold out (like during evening peak demand), you can charge a premium.
Solar and wind are the cheapest forms of power because they have free fuel. They can outcompete everything else when the sun is shining or the wind is blowing.
Typically, gas is the most expensive form of generation, and its rate often sets the price of electricity at peak times. Its flexibility as a source of supply means gas can remain offline much of the time and come on only when needed.

Average price over 12 months
Average value by source in the NEM between 8 Apr 2024 - 13 Apr 2025.
Source: OpenElectricity
Sources like batteries and pumped hydropower (which functions like batteries) act like gas, with the added benefit that they can soak up cheap renewable energy during the day and release it in the evening when needed.
But the grid used to be much simpler â it was virtually all coal.
Renewables enter the picture
If we take a look at the NEM (the grid covering most of Australiaâs population), we can trace back its evolution over time.

The NEMâs data begins in 1999.
More than 90 per cent of generation was from coal.
Spring 1999
Gas and hydro filled in the rest.
Wind starts to pick up in the grid in 2007.
Over here!
Spring 2007
Then utility-scale solar in 2015.
Spring 2015
Coal has ticked down to about 75 per cent.
And in 2024, it fell below 50 per cent for the first time.
Spring 2024
In October 2024, renewables had a record month, exceeding 47 per cent .
Much of this change has taken place thanks to policies aimed at making renewable energy cheaper and more competitive. But Australia has never had a ban on new coal-fired power stations, most of which were built decades ago.
Those plants werenât designed to last forever. Like any piece of machinery, we eventually need to replace them. And, according to many industry analysts, renewable energy sources these days are the cheapest way of doing it.
But while they may be the cheapest, they operate in a very different way to coal-fired power.
The shape of supply
Letâs look at an average dayâs energy mix in New South Wales as an example.

Average daily energy generation in NSW
Generation
10,000 MW
HYDRO
8,000
SOLAR
6,000
GAS
BATTERIES
WIND
4,000
COAL
2,000
IMPORTS
0
12am
6am
Noon
6pm
12am
Average generation in NSW between 6 Mar - 3 Apr 2025.
Source: OpenElectricity
You can see that solar and coal are the two biggest contributors â solar during daylight hours and coal running 24/7, making up the largest share of the mix.
Wind, hydro and gas, along with any imports from other parts of Australia make up the rest of the supply.
But what you notice is that as solar falls away in the afternoon, thereâs a big spike in afternoon demand for power from the grid.
And thatâs because most rooftop solar doesnât come from the grid. Rather, householders generate it themselves.
To show you in a bit more detail, letâs look at a week in March.
Dr McConnell says solar and wind are radically changing the way other generators have to behave.
âWe basically see, in the middle of the day in particular, coal plants across the NEM, brown coal and black coal, being squeezed out by renewable energy,â he says.
âWeâre seeing coal plantsâ overall utilisation essentially decline, but the shape of that utilisation changing dramatically. It is behaving much more like a flexible peaking plant almost.â
Tensions between renewables and base-load generation
Youâve probably heard weâre at the point where sometimes we have too much renewable energy. But thatâs not quite right. What we have at times is more renewable than can be accommodated by coal-fired plants.
Particularly in bumper periods like spring and autumn where mild temperatures reduce energy demand, we actually have to curtail â or turn off â solar and wind production to keep coal plants running.
You see, base-load generation needs to avoid shutting down because of both mechanical limitations and operating costs. Like riding a bike, it can only slow down to a minimum speed before it becomes unsafe to operate.
And the grid still needs the stability and security services those base-load plants provide.

It costs more to keep base-load running
Cheap solar energy is available during the day but is curtailed (wasted).
12am
12am
Demand
Cheaper solar
More expensive coal
minimum operating capacity
Base-load generation, for technical or economic reasons, typically does not shut off.
When solar is consistently the cheapest form of generation, it creates this awkward scenario where we have to switch off large-scale solar farms to figuratively keep the lights on for coal â effectively paying more than we need to for energy during those times.
Dr McConnell says this âcurtailmentâ of renewable energy is a growing feature of Australiaâs electricity system.
It is sometimes caused by physical limitations on the poles-and-wires networks â like a freeway at peak hour, there just isnât enough capacity to handle anymore electricity.
But itâs also being driven by economics. Renewable energy is pushing wholesale prices to such low, or even negative levels, it doesnât make sense for wind and solar farms to keep producing at times.
â(Curtailment) basically just represents an amount of generation that is theoretically possible to be generated but isnât because of a combination of either technical limits or economic conditions,â he says.
âWeâre seeing quite a lot of that.
âSome solar farms are upwards of 40 per cent curtailed at different times of the year, sometimes even higher.
âBut at an aggregate level, weâre seeing 10 per cent of renewable energy curtailed across the grid.â

Cheaper solar bites into coal demand
6,000MW
6,000
3,000
3,000
12am
12am
12am
12am
Average daily generation in NSW between 12 Mar - 9 Apr 2025. Prices are the average across the NEM across 12 months.
Source: OpenElectricity
To complicate things further, Australia has one of the highest rates of rooftop solar in the world. There are now more than 4 million small-scale installations on homes and businesses all over the country. And rooftop solar canât just be shut down. Itâs growing presence has implications for grid demand and for operators like AEMO to manage.
Remember that metaphor in which AEMO is like a conductor? In the case of rooftop solar, itâs like the audience has started singing along and the conductor has to work out whether to conduct it or when tell it to be quiet.
More than any other technology, itâs rooftop solar that has undermined the business case for coal and forced change on the market. Dr McConnell says coal plant operators are, to a certain extent, learning to adapt to the new world, but at a certain point working this way becomes unprofitable.
âI guess thereâs a distinction between being technically possible and economically viable.â
Without new coal being built, weâve got a limited amount of time until it exits the system. State governments are striking deals to keep some coal plants on for longer, but AEMO still expects most of the fleet to be gone in the next decade.
So, what would a grid without coal look like? Looking at our electricity use on a state level gives us a good idea.
Evolving the grid for the future
Queensland, New South Wales and Victoria are primarily run by coal. WA uses a large share of gas due to its large-scale production in the state. Meanwhile, Tasmania makes use of its water resources for hydro power, with imports from neighbouring Victoria for support.

Queensland
New South Wales
Victoria
10,000
8,000MW
6,000
5,000
4,000
3,000
12am
Noon
12am
12am
Noon
12am
12am
Noon
12am
Western Australia
South Australia
Tasmania
3,000
1,200
2,000
600
1,500
1,000
12am
12am
12am
12am
12am
12am
Average daily generation between 6 Mar - 3 Apr 2025.
Source: OpenElectricity
But take a closer look at South Australia.
South Australia closed its last coal-fired power plant in 2016, and now runs on a mix renewables, gas, imports and, increasingly, batteries.
The grid of the future
Dr Mconnell says SA provides a really useful snapshot into what much of Australiaâs grid could look like, but itâs not quite there yet.
He says storage is something that will need to grow. SA is a leader in battery use, but thereâs still a long way to go for battery projects in Australia, and even then, batteries arenât always sufficient or the only solution.
Big batteries generally discharge for about four hours and although there are eight-hour ones coming online, they work well in a cycle of charging up during the day before discharging in the evenings.
For those situations where we might want power over a longer period of time, pumped hydro is another technology thatâs on the rise.
Snowy 2.0 in the Snowy Mountains has been hailed as an important addition to the NEM. Essentially, itâs one big battery â you pump water uphill using cheap electricity and then run it though a turbine back down to generate electricity when needed.
The big difference is that storing all this energy in the form of water is easy to do at a scale thatâs vast compared to an average battery. It canât compete with batteries in terms of how quickly it can charge and discharge power, but it can step in when renewable energy levels are lower over longer periods of time.

Pumped hydro works like a battery
Charging
Water is pumped to a higher reservoir and stored, when energy is abundant.
power station
Discharging
Water is released to spin turbines generating electricity, when itâs needed.
While we roll these technologies out at scale, open-cycle and peaking gas plants are much better suited to complementing solar and wind power than coal.
Crucially, Dr McConnell says they can run for days or weeks at a time.
âThey are complementing renewable energy rather well,â he says.
âThey are spending a lot of time offline and then coming on in those critical peaks.â
On the downside, he says gas generators, like coal plants, still face a critical problem â their share of the market is being eroded by renewable energy.
And they, too, produce emissions.
He says itâs hard to make a business case for a plant that only runs some of the time. He says thatâs why Australia should be prioritising things that are cheap to build, even if theyâre expensive to run.
Longer-term Dr McConnell reckons gas turbines will still be a natural complement to and back-up for intermittent wind and solar power and storage. Whether the gas is natural gas â or fossil gas, as he calls it â or some other type of fuel such as hydrogen is an open question.
What does this mean for nuclear power?
But what is clear, according to Dr McConnell, is there is a very limited role for any base-load power in Australia in the future, let alone large amounts of what is in nuclear almost the ultimate source of round-the-clock generation.
He says thatâs why the experience of coal is such a useful way to understand the challenge nuclear faces. In both cases, the up-front â or capital â costs of building the plant are high and construction can take a long time â decades, even.
The key to the economic success of such plants is running them at or near their capacity as much as possible to ensure owners can recoup their huge investments.
The Coalitionâs plan assumes that we will run nuclear almost around the clock to recoup those costs, but Dr McConnell says in Australia the experience of coal suggests thatâs not feasible.
âIf you were running a nuclear power plant flat out, a 90 per cent capacity factor⌠most of the year, then the cost of that generation is very different to what we might see, say, with a 50 per cent capacity factor,â he says.
â(That) is getting close to what we see in some coal plants in New South Wales at the moment or even lower.
âThe costs disproportionately increase as you decrease that utilisation rate.â
And while he acknowledges that technically nuclear plants can be more flexible than brown coal generators, he says that would do little to improve their viability.
âJust to reiterate, being technically flexible and running like that is quite distinct from that being an economically viable thing to do,â Dr McConnell says.
To reconcile the dissonant natures of renewable energy and nuclear power, he argues something will have to give.
Already in New South Wales coal isnât running at anywhere the level required to make nuclear viable.

Coal plant running at a higher capacity
NSW Coal generation
5,000MW
0
Sun 16 Mar
Mon
Tue
Wed
Thu
Fri
Sat
Running at a lower capacity
But remember that little red line in SA. Thatâs whatâs currently needed to keep the grid secure â a tiny fraction of total demand.

SA Gas generation
1,000MW
0
Thu 27 Mar
Fri
Sat
Sun
Mon
Tue
Wed
7pm
4.7% gas
94.7% wind + batteries
Either nuclear power plants will have to dial down during periods of high green energy production â as coal plants do now â or solar and wind will need to be curtailed or not built at all.
And that wonât mean just turning off solar farms. Itâll also involve turning off rooftop solar and charging households to use power from the grid when they could be getting it for free from the sun.
âIf⌠youâre turning off rooftop solar as opposed to ramping down your nuclear plant, then thatâs obviously going to be a politically challenging direction,â Dr McConnell says.
For Dr McConnell, the answers to Australiaâs energy problems are not as complicated as they might seem.
He says thereâs now so much renewable energy in system â and so much more coming â that trying to turn back the clock in favour of a base-load technology would be folly.
Instead, he argues Australia should come to grips with the likelihood that its grid would soon be dominated by renewable energy â and take the necessary steps to ensure it works properly.
âEssentially, the things that you want to balance renewables⌠tend towards lower capital cost and higher running costs,â he says.
âAnd thatâs why peakers and gas generators play this role now or fit well with this role.
âThey are essentially the opposite of what is provided by a nuclear power plant.â
Could things change in the future?
Elsewhere in the world, nuclear power is enjoying renewed interest as demand for electricity â driven by factors from rising wealth to the growth of data centres and artificial intelligence â surges.
Nuclear power is, after all, already a major source of emissions-free electricity in many places.
Similarly, the electrification of everything â from the cars we drive and our household heating systems, to the industrial processes we use to make things â will add ever more to demand for power.
Even accounting for this, Dr McConnell says the case for nuclear energy in Australia will be a hard sell.
In places where nuclear is resurging, the availability of land or the quality of the wind and solar resources is often lacking. But he says thatâs not the case in Australia.
âHonestly, I struggle to see that in Australia, specifically, because we have such an abundance of resources and land and renewable energy capacity,â he says.
âDepending on who you talk to, weâre talking 20 years until a nuclear power plant will be built in Australia. Maybe you could go plus or minus five years on that, but weâre talking a long time.
âAnd weâve got a lot of coal-fired power stations that are coming to the end of their technical lives.
âItâs sort of like, âWell, what do we do in the meantime?ââ
Notes on the data
- Energy data is from OpenElectricity
- Average generation data for states covers the period from 12am March 6 to 8am April 3, 2025
- Average prices by energy source is for the NEM between April 8, 2024 to April 13, 2025
- Data for solar includes both utility and rooftop solar
Credits
Odyssey format by ABC News Story Lab